We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
4 Large-Cap Funds to Buy as Inflation Spike Seems Unlikely
Read MoreHide Full Article
Per the latest data by Bureau of Labor Statistics, Consumer Price Index (CPI) came in above the consensus estimate and spiked fears regarding a possible rate hike due to a surge in inflation. However, the index appears largely inflated especially after considering the fact that the index in general as well as after-excluding food and energy prices has not shown much increase year over year.
Under such circumstances, when a spike in inflation and therefore rate hikes in the near future seem highly unlikely, investors must consider putting their money in large cap-mutual funds.
CPI Data is Overblown
The U.S. CPI came in at 0.5% for the month of January, surpassing the expectations of 0.3% growth. The Core CPI, which excludes food and energy prices in the economy, grew 0.3% for the month, above the consensus estimate of 0.2% growth. Such apparently “impressive” data spiked fears among investors that inflation might shoot up to perilous levels.
Upon closer examination, one finds that CPI improved just 2.1% year over over, which remains the same as December. A monthly spike in the index can be attributed to seasonal fluctuation after the holiday season. Food prices increased 0.2%, whereas prices of fuel oil surged 9.5% post holidays.
Considering such factors, rest assured that inflation is not set to shoot up anytime soon. This claim is further supported by the fact that even the Core CPI increased a meager 1.8% year over year last month, remaining well below the 2% target level.
Wage Growth, a Seasonal Impact
According to the U.S. Bureau of Labor Statistics, average hourly earnings rose by 0.3%, or 9 cents, to $26.74 in January, up 2.9% for the year, marking its highest yearly growth since mid 2009. Average hourly earnings for sectors like manufacturing, construction and restaurant rose 3 cents each. Some other industries like information, professional and business services, and education and health services saw an average hourly increase of 21 cents, 18 cents and 11 cents, respectively. Further, private-service providers generated average hourly earnings of 10 cents.
On the face of it, the labor market appears tight, but is it really the case? One must also take into consideration the fact that this data comes right after parts of America were under the impact of severe winters. Under such conditions, jobs are in plenty with a severe shortage of labor. This leads to a rise in wages. Therefore, wage growth is a seasonal effect after all.
Why Invest In Large-Cap Growth Funds?
Large-cap funds are ideal investment options for those seeking a high return potential accompanied by lower risk than small-cap and mid-cap funds. These funds have exposure to large-cap stocks with a long-term performance history, assuring more stability than what mid or small caps offer.
Additionally, growth funds focus on realizing an appreciable amount of capital growth by investing in stocks of firms, the value of which is projected to rise over the long term. However, relatively higher tolerance to risk and the willingness to park funds for the longer term are necessary when investing in these securities. This is because these may experience relatively greater fluctuation than the other fund classes.
4 Best Funds to Buy
Given such circumstances, we have highlighted four large-cap growth mutual funds, the values of which are poised to gain significantly in the long run. These funds also carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging three and one-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Principal LargeCap Growth I R4 (PPUSX - Free Report) seeks capital growth for the long run. PPUSX invests a bulk of its assets in equity securities of large-cap companies. The fund invests mainly in securities of those companies that are expected have above-average growth potential.
The Principal LargeCap Growth I fund, as of the last filing, allocates its assets in top two major groups; Large Growth and Large Value.
PPUSX has an annual expense ratio of 0.97%, which is below the category average of 1.11%. The fund has three and one-year returns of 13.5% and 29.4%, respectively.
T. Rowe Price Blue Chip Growth (TRBCX - Free Report) invests heavily in common stocks of large as well as mid-cap blue-chip companies. The fund focuses on those companies that have good financial fundamentals, seasoned management and strong market positions.
The T. Rowe Price Blue Chip Growth fund, as of the last filing, allocates its assets in top two major groups; Large Growth and Emerging Market.
TRBCX has an annual expense ratio of 0.72%, which is below the category average of 1.11%. The fund has three and one-year returns of 16% and 34.7%, respectively.
Fidelity Large Cap Growth Enhanced Index seeks appreciation of capital. FLGEX invests a large chunk of its assets in common stocks of large-cap companies included on the Russell 1000 Growth Index.
The Fidelity Large Cap Growth Enhanced Index fund, as of the last filing, allocates its assets in top two major groups; Large Growth and Large Value.
FLGEX has an annual expense ratio of 0.40%, which is below the category average of 1.11%. The fund has three and one-year returns of 12% and 23.6%, respectively.
Loomis Sayles Growth A (LGRRX - Free Report) invests in equities such as common stocks and warrants of large-cap companies. LGRRX may also invest, to a lesser extent, in small- and mid-cap companies. LGRRX invests in multiple sectors and industries.
The Loomis Sayles Growth fund, as of the last filing, allocates its assets in top two major groups; Large Growth and High Yield Bond.
LGRRX has an annual expense ratio of 0.91%, which is below the category average of 1.11%. The fund has three and one-year returns of 15.5% and 29.1%, respectively.
Image: Bigstock
4 Large-Cap Funds to Buy as Inflation Spike Seems Unlikely
Per the latest data by Bureau of Labor Statistics, Consumer Price Index (CPI) came in above the consensus estimate and spiked fears regarding a possible rate hike due to a surge in inflation. However, the index appears largely inflated especially after considering the fact that the index in general as well as after-excluding food and energy prices has not shown much increase year over year.
Under such circumstances, when a spike in inflation and therefore rate hikes in the near future seem highly unlikely, investors must consider putting their money in large cap-mutual funds.
CPI Data is Overblown
The U.S. CPI came in at 0.5% for the month of January, surpassing the expectations of 0.3% growth. The Core CPI, which excludes food and energy prices in the economy, grew 0.3% for the month, above the consensus estimate of 0.2% growth. Such apparently “impressive” data spiked fears among investors that inflation might shoot up to perilous levels.
Upon closer examination, one finds that CPI improved just 2.1% year over over, which remains the same as December. A monthly spike in the index can be attributed to seasonal fluctuation after the holiday season. Food prices increased 0.2%, whereas prices of fuel oil surged 9.5% post holidays.
Considering such factors, rest assured that inflation is not set to shoot up anytime soon. This claim is further supported by the fact that even the Core CPI increased a meager 1.8% year over year last month, remaining well below the 2% target level.
Wage Growth, a Seasonal Impact
According to the U.S. Bureau of Labor Statistics, average hourly earnings rose by 0.3%, or 9 cents, to $26.74 in January, up 2.9% for the year, marking its highest yearly growth since mid 2009. Average hourly earnings for sectors like manufacturing, construction and restaurant rose 3 cents each. Some other industries like information, professional and business services, and education and health services saw an average hourly increase of 21 cents, 18 cents and 11 cents, respectively. Further, private-service providers generated average hourly earnings of 10 cents.
On the face of it, the labor market appears tight, but is it really the case? One must also take into consideration the fact that this data comes right after parts of America were under the impact of severe winters. Under such conditions, jobs are in plenty with a severe shortage of labor. This leads to a rise in wages. Therefore, wage growth is a seasonal effect after all.
Why Invest In Large-Cap Growth Funds?
Large-cap funds are ideal investment options for those seeking a high return potential accompanied by lower risk than small-cap and mid-cap funds. These funds have exposure to large-cap stocks with a long-term performance history, assuring more stability than what mid or small caps offer.
Additionally, growth funds focus on realizing an appreciable amount of capital growth by investing in stocks of firms, the value of which is projected to rise over the long term. However, relatively higher tolerance to risk and the willingness to park funds for the longer term are necessary when investing in these securities. This is because these may experience relatively greater fluctuation than the other fund classes.
4 Best Funds to Buy
Given such circumstances, we have highlighted four large-cap growth mutual funds, the values of which are poised to gain significantly in the long run. These funds also carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging three and one-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Principal LargeCap Growth I R4 (PPUSX - Free Report) seeks capital growth for the long run. PPUSX invests a bulk of its assets in equity securities of large-cap companies. The fund invests mainly in securities of those companies that are expected have above-average growth potential.
The Principal LargeCap Growth I fund, as of the last filing, allocates its assets in top two major groups; Large Growth and Large Value.
PPUSX has an annual expense ratio of 0.97%, which is below the category average of 1.11%. The fund has three and one-year returns of 13.5% and 29.4%, respectively.
T. Rowe Price Blue Chip Growth (TRBCX - Free Report) invests heavily in common stocks of large as well as mid-cap blue-chip companies. The fund focuses on those companies that have good financial fundamentals, seasoned management and strong market positions.
The T. Rowe Price Blue Chip Growth fund, as of the last filing, allocates its assets in top two major groups; Large Growth and Emerging Market.
TRBCX has an annual expense ratio of 0.72%, which is below the category average of 1.11%. The fund has three and one-year returns of 16% and 34.7%, respectively.
Fidelity Large Cap Growth Enhanced Index seeks appreciation of capital. FLGEX invests a large chunk of its assets in common stocks of large-cap companies included on the Russell 1000 Growth Index.
The Fidelity Large Cap Growth Enhanced Index fund, as of the last filing, allocates its assets in top two major groups; Large Growth and Large Value.
FLGEX has an annual expense ratio of 0.40%, which is below the category average of 1.11%. The fund has three and one-year returns of 12% and 23.6%, respectively.
Loomis Sayles Growth A (LGRRX - Free Report) invests in equities such as common stocks and warrants of large-cap companies. LGRRX may also invest, to a lesser extent, in small- and mid-cap companies. LGRRX invests in multiple sectors and industries.
The Loomis Sayles Growth fund, as of the last filing, allocates its assets in top two major groups; Large Growth and High Yield Bond.
LGRRX has an annual expense ratio of 0.91%, which is below the category average of 1.11%. The fund has three and one-year returns of 15.5% and 29.1%, respectively.
To view the Zacks Rank and past performance of all large-cap growth mutual funds, investors can click here to see the complete list of funds.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>